Health Care Reform Poses Risks to Hospital Exemptions

Not-for-profit hospitals have been through many fire drills in Washington over the years. For a period of time there was intense Congressional scrutiny of all not-for-profit entities resulting in reform at many levels in the charitable sector. Of late that scrutiny has eased, however conversations continue to take place about additional action that may be needed to keep the sector functioning as it was intended.

The passage of the health care reform act impacted many facets of the not-for-profit health sector. There is now some concern that the tax exemption for hospitals is at risk of being eliminated at some point in the future. The community benefit requirements and reporting elements could open the door to serious consequences for hospitals that do not meet these standards. BNA Daily Tax Report (sub. req’d) had this quote from Michael Sanders of Blank Rome:

“because health care legislation is far from over, and there will be review and consideration of issues with the focus on paying for various government programs, the concern that practitioners have now is that there is going to be “another major step at a point in time.” The target could very well be the 501(c)(3)s.”

Since so much of the health care reform act has yet to be implemented, hospitals have a chance to be heard and make a difference. The key will be proper messaging and selective delivery. It is crucial for non-profit hospitals to become involved in the conversation regarding this area of implementation.